GBP/USD tests fresh highs
British pound is conquering fresh highs versus the US dollar on Tuesday. The cable hit $1.6468 in Asian trade, levels it last seen in August 2011. Investors were inspired by the BOE Carney’s late Monday optimistic comments on the economic recovery. GBP was also influenced by EUR strength, with EUR/USD hitting a 6-week high today.
UK house prices rose to the highest in more than a decade, today’s data showed. Later in the day Britain released less positive figures: October trade deficit shrank less than expected to 9.7 billion from 10 billion (revised from 9.8 billion), while industrial and manufacturing production growth slowed to 0.4% each (versus 0.3% and 0.4% forecast respectively). GBP/USD has lost some ground after the data, weakening into the $1.6440 area in the European session.
“Sterling looks likely to continue to grind higher against the dollar, even if the dollar looks a little oversold,” strategists at Canadian Imperial Bank of Commerce in London say. “People will be continuing to talk about a break or a test of $1.6500 in the short term, even though we’ve only just broken through $1.6400.”
Chart. Daily GBP/USD